Sometimes, the same theme produces echoes all over the news at once, and this appears to be such a time. The three news stories mentioned in the title are certainly seen as very different, but I think there's a pattern here.
First, the old news (still critically important, but not exactly breaking now). As mentioned in the post below, last week the Senate passed a bill intended to reform the financial system. While it’s not clear that the legislation will do what needs to be done to fix the problem, there is still a reconciliation process to conclude, during which the final product may be improved over the individual bodies’ bills (light a candle, and more importantly, write your representatives and senators).
Whether or not it does what is needed, what is clear is that the problem the new legislation needs to solve is the dismantling of government regulation that allowed and encouraged irresponsible risk taking with other people’s money in the financial sector. James Coffman, former assistant director of SEC enforcement, is quoted in a piece last year in
The Baseline Scenario blog (and this year in
13 Bankers) as follows:
“Elected deregulators appointed their own kind to head regulatory agencies and they, in turn, removed career regulators from management positions and replaced them with appointees who had worked in or represented the regulated industries. These new managers and, in many cases, the people they recruited and promoted, advanced or adhered to a regulatory scheme that, at least with respect to the most important issues, advanced the interests of the regulated.”
What we have recently rediscovered is that when the traffic cops are removed from the highway system, some people will drive recklessly, and if they are driving big enough vehicles, they can cause a lot of carnage when the consequences of their recklessness come a-calling. A highway patrol whose officers and leadership were convinced that reckless driving would be prevented by the combination of other drivers’ disapproval and the reckless drivers’ self-interest would be a laughable waste of taxpayer’s money, yet we cheerfully accepted that same premise when it came to taking care of our financial system.
While he was writing about the SEC and other financial regulators, Coffman’s description is hardly applicable to only that industry. Over the last several years, we have been reaping the questionable benefits of three decades of policy prescriptions that flowed from Ronald Reagan’s widely repeated shibboleth that “Government is not a solution to our problem, government is the problem.” That premise has led to the steady erosion of the legal underpinnings, the enforcement budgets, and the sense of purpose in dozens of government agencies. Department after department has spent at least twenty of the last thirty years in the hands of people who were selected because they were convinced that the best use of their time was to drastically diminish or completely destroy the agencies they were charged with running. In some cases, that process took a pause during the Clinton administration, but in many, it did not. After all, Clinton himself was the guy who declared that “the era of big government is over”.
As to the effects of putting people in charge of government who were inimical to its stated purposes, they varied from neglect bordering on malfeasance to outright plundering of public resources for private gain. In the case of the FTC, the EPA, the Consumer Product Safety Commission, the FDA and USDA’s agricultural inspection functions, OSHA, the NLRB, FEMA, and others (including a host of similar state agencies), the regulatory functions were simply crippled by lack of funding, hostility in the executive branch, and dramatic shortages of personnel. In others, the regulatory agencies actively helped the industries they were tasked with regulating to plunder the public’s investment in its own protection by either breaking themselves up and selling the pieces off at fire sale prices to private interests, or establishing rules that provided no protection to the public at large, but significant subsidies to those who had the clout to manipulate the process.
This latter practice has provided us with the spectacles of (among others), the FCC selling off the public’s control of the airwaves to private companies at prices that would make a Russian oligarch blush, the US Patent Office accepting patents on things that weren’t invented, but discovered (so Monsanto can sue farmers who have planted natural strains of various crops on which Monsanto has registered a seed patent), the SEC making rules that socialize financial risk for the benefit of private profiteers, the Mine Safety and Health Administration presiding over a string of disasters that have killed dozens of miners and the development of a mountaintop removal mining industry that wreaks terrible damage on the surrounding countryside, and the Department of the Interior giving free passes to the industries it’s supposed to regulate for the exploitation of various natural resources taken from public lands; grazing fees, lumber rights, and (most famously lately), oil and mineral lease fees.
Which brings us to the disaster that has been unfolding for the last several weeks in the Gulf of Mexico. The events of the last month have made it abundantly clear that the Interior Department has been in bed with the oil industry for so long that there has been no regulation of that industry in the public interest for years, and just as lack of regulation led to the financial disaster, so here that cozily corrupt relationship has led the Deepwater Horizon drilling rig explosion and collapse to what will almost certainly end up being the worst man-made ecological catastrophe in human history – the wetlands being destroyed every day are among the world’s most prolific breeding grounds for all manner of wildlife, and it will take them decades to recover, if they ever do. Even if the marshes do recover, it’s entirely open to question whether the dozens or hundreds of species that rely on using them to spawn and feed young will survive the loss of that habitat for so long.
It’s a stain on the Obama administration’s good name that there was no priority attached to reforming the Minerals Management Service, despite the fact that it has been a matter of public record for over two years that regulators in that agency were literally sleeping and doing drugs with the representatives of the companies they were charged with regulating. A situation that egregious should have been rectified as soon as Secretary Salazar was confirmed, and while sacking the head of the service last week was probably a good idea, there’s no good reason to stop there. Salazar himself should have been on this case personally, yet there is no evidence he did anything to make cleaning that house a priority for Ms. Birnbaum, and it’s becoming increasingly apparent that his stewardship of our natural resources leaves a lot to be desired as well.
In addition to the individual failures here, though, this mess highlights another aspect of the effects of trying to drown a government in a bathtub for thirty years, and one that presents a real problem for the Obama administration and anybody else interested in government that actually serves the purposes we set for it. We have seen repeated criticism this week of the Obama administration for its failures before the disaster and after it, and repeated questions of why the government is allowing BP to take the lead in managing the disaster. These questions are perfectly appropriate, but in the administration’s defense, this is another facet of what’s so dangerous about the promotion of people whose concept of their own jobs is to either ignore them or actively seek to make them disappear, and/or people who believe that they are in their offices to serve the industries they regulate, instead of the public at large. Not only are such people at least useless and often dangerous in and of themselves, but their ascendancy and influence also discourages those public servants who were not political appointees, and who do believe in what they do for a living enough to take it seriously. Over the last couple of years of the Bush administration, we saw a number of stories about career civil servants leaving government in droves, taking early retirements or just quitting in heartbroken disgust. That brain drain makes it much harder to clean house in a dysfunctional agency, because there is no “bench” from which to draw replacement regulators – the agencies who suffer these mass departures have been “hollowed out” by them, and are in a poor position to respond to any emergency, or even fulfill the day-to-day responsibilities they are tasked with.
That in turn brings us to Rand Paul, who distinguished himself last week by saying a few really nutball things about the Civil Rights Act, and then followed that up by saying that the administration’s response to the Deepwater Horizon disaster was “un-American” by virtue of having been specific about where the responsibility for causing the disaster really lay and determined to keep BP’s feet to the fire about taking its responsibility seriously. Like his father, Dr. Paul is a staunch libertarian, and is therefore fully committed to drowning as much of government in a bathtub as he can manage. His view that the Civil Rights Act’s requirements (that private businesses that serve the public give black folks the same services as whites) are an unwarranted intrusion on the freedoms of bigots, and his view that Secretary Salazar’s pledge to keep the government’s “boot on the neck” of BP represents an “un-American” intrusion on the freedoms of environmental terrorists are all of a piece.
Paul’s views are also of a piece with the views of another celebrated libertarian, Alan Greenspan, who was a driving force in deregulating the financial markets, due to his belief that protecting the public from having financial gamblers stake themselves to huge profits at the risk of vast public expense was both unnecessary and an unwarranted intrusion on the freedoms of financiers. At least Greenspan had the intellectual honesty to admit (after the meltdown) that his faith in unregulated free markets was wrong, but that admission came too late to stop the dismantling of that regulation. Libertarianism has many things that make it very attractive as a theoretical philosophical position, but if taken to its logical extreme, as many high school readers of Ayn Rand and altogether too many adult political theorists are inclined to do, it just provides intellectual cover for the sort of governmental vandalism whose consequences have been all around us lately.
It’s going to be the task of years to remove the vandals from their positions of power in these bureaucracies and replace them with folks who actually believe in what they’re doing when they go to work, and until it’s done, the Republican mantra that “…government is the problem” will continue in some measure to be the self-fulfilling prophecy it always has.
